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Thursday, 2 February 2017

Resolution: Application of Hibah in the Contract of Al-Ijarah Thumma Al-Bai` (Central Bank of Malaysia)

An Islamic
financial institution would like to offerhibahinal-ijarah thumma al-bai`(AITAB)
as an incentive and encouragement to customers to timely observe their monthly
payment of rent according to the prescribed schedule. In the proposed
arrangement,hibahwill be given to customers who pay their monthly
rents in the first year without any late payment. The proposedhibahrate
is 1% of the financing amount which will be directly credited into the account
of eligible customers on the 13thmonth.
However, customers who settle all his debts and terminate their AITAB contract
within the first 12 months are not eligible to receive suchhibah.

In this regard, the SAC was referred to on the
issue as to whether the application of the concept ofhibahin
AITAB as proposed is permissible.

Resolution

The SAC, in its 13thmeeting dated 10 April 2000, has resolved
that givinghibahin an AITAB contract as an incentive to the
customer who pays on schedule as proposed is permissible.

Basis of the Ruling

Givinghibahand gift is highly recommended as suggested in
the following verse of al-Quran andhadithof Rasulullah SAW:

“...but if they choose of their own accord to
make over to you a part of it, then you may enjoy it with pleasure and good
cheer.”120

“Abu Abdullah al-Hafiz has reported to us, he
said, I heard that Abu Zakaria Yahya bin Muhammad al-`Anbari said, I heard that
Abu Abdullah al-Busyanji said, about the saying of the Prophet Muhammad SAW:
Exchange gifts (among you) and you will love each other.”121

Besides that, there is no impediment in
Shariah to apply the concept ofhibahin AITAB contract sincehibahis a benevolent act and is at the discretion of
the giver ofhibah.